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More landlords use child care to bolster amenities

Corporate tenants fueling demand beyond fitness centres and cafes

Tuesday, April 3, 2018

By Rebecca Melnyk

As provincial governments take baby steps to advance accessibility to child care, corporate tenants are increasingly demanding daycare centres in their buildings to help female employees go back to work and pursue their careers after maternity leave.

Some landlords, in turn, are prioritizing these spaces as they would a fitness centre or a meeting area, looking at child care as a property investment to attract companies.

“There’s definitely a continuing growth trend,” says Tyler Sopik, principal and lead sales representative with the Retail Services Group at Avison Young and broker for Kids and Company, a national daycare provider with more than 100 locations across North America. “Landlords are beginning to get into mixed-use real estate, which is more prevalent in all markets. With cities like Toronto being more live-work-play, 24/7, having this amenities in a building is a continuing trend.”

Kids and Company has 15 more spaces scheduled to open in the next 24 months. In Toronto, Crown Realty Partners is about to start construction on a Kids and Company centre in The Link at 300, 302 and 304 The East Mall in Etobicoke. The goal is to attract tenants to the suburbs and cater to young professionals, giving them options they would be more privy to in the downtown core.

“We have a very large pocket of vacancy right now in the suburbs of about 140,000 square feet,” says Scott Watson, partner of leasing and marketing at Crown. “We see this as putting in many amenities to attract major corporations that will also serve the surrounding residential community.”

300 302 304 The East Mall in Etobicoke, Ontario.

The Link, formally the Valhalla Executive Centre, was constructed in the early 1970s. Older buildings like this often hinder landlords from building out child care centres.

“Office buildings constructed 40 or 50 years ago were never designed to accommodate these types of uses,” notes Sopik. “A lot of retrofits are happening, but I’d say a lot of our new deals in terms of expansion are in new construction buildings.”

Child care spaces require a dedicated, exclusive outdoor play area, appropriate pick-up and drop-off areas and accessible ground or second floor space with lots of natural light, among other features. Property managers at The Link had to change the zoning plan, get site approval and licensing.

“It’s one of the most highly regulated industries out there,” notes Sopik. “What takes these deals so long is the amount of high-level design, expensive buildout and making sure regulations are met to the highest degree and that it’s a safe place.”

Depending on the organization, obtaining provincial licensing can also draw out the process.

“Sometimes it takes independent child care organizations well over a year to operate the daycare,” says Watson. “It’s tough for a landlord to sit on that empty space for so long in the hopes they get their license.”

On the plus side, landlords can also acquire more rent with a child care centre in place.

“When you compare class-A office spaces that have or don’t have it there’s compelling evidence you can charge higher rents,” says Sopik. “All the buildings we occupy across the country are 60 to 70 per cent office buildings and those landlords claim their biggest amenity is child care.”

Better deals can also be negotiated with landlords who ask Kids and Company to lease their space. The savings are then passed onto the employee whose fees become less expensive, since fees fluctuate based on the cost of rent.

The Link’s child care centre will be one of Kids and Company’s smallest in the country at 4,300 square feet and a 60-child capacity. Most are 8,000 square feet and accommodate 100 to 120 infants and toddlers. They reside in class-A office space in cities across the country, but are less prevalent in areas like downtown Vancouver where vacancy is low.

“But in Calgary, with tons of vacant space, we’re a hot commodity because we can potentially fill up the buildings or move tenants over,” says Victoria Sopik, CEO of Kids and Company who is working alongside her son Tyler. Both are passionate about making child care more accessible in the country where infant care in lacking.

Recent provincial budget announcements show investment in child care is gaining ground. In Manitoba, a new refundable corporation income tax credit will be available for private corporations that create new child care centres in workplaces.

“To open up child care is very expensive; its capital intensive, so the more programs that help open up spaces, the better,” says Tyler.

But proposed new laws laid out in other provincial budgets don’t benefit all women returning to work after 12 or 18 months when parental leave ends. Many of these women desire convenient and flexible daycare so they can retain executive positions right away or balance a more entrepreneurial lifestyle. According to the recent Rosenzweig Report on Women at the Top Levels of Corporate Canada, just over 90 per cent of the most senior jobs continue to be held by men at the country’s 100 biggest publicly-traded companies.

Many corporations, such as banks, law firms and insurance companies, where the majority of women work in the lower rungs of leadership, are located in class-A office buildings where such an amenity could promote gender parity in the workplace. Inaccessible child care is believed to cause women to work from home. Knowing they have a guaranteed space for their child after parental leave and access to other child care centres if a company moves is one way to relieve the burden.

“More and more companies are understanding how important it is to retain talent by supporting them having children,” says Victoria. “Every year that goes by, we see more support from all the stakeholders. We see a huge need for child care in Canada and we’re happy to be part of the expansion.”

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